previous - promotion optimization institute
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Driving Mutual Growth
in a Dynamic
Retail Environment
with an RGM Focus
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b
• RGM Leader for Campbell Soup Company
• RGM Leader for Dr Pepper Snapple
• CPG - Nielsen, Dean Foods, ConAgra, WestRock
• Consulting - Hospitality, Financial Services, Healthcare
ANDRE ROMERO
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The Journey So Far…
Revenue Growth Management Playlist
#RGMRocks
Enter Sandman
Metallica
Mr. Brightside
The Killers
Love and Memories
Of A Revolution
Wonderwall
Oasis
Under Pressure
David Bowie + Queen
Is RGM Sales
Prevention?My Head Explodes
Light at the end of
the tunnel ☺CPG is Tough!
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6CPG is
hard!
Consumer
Landscape
WhoWhat
Where
Evolving Retail
ChannelOmni
Private Label
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we are all feeling it…
0%
25%
50%
75%
100%
Source: Nielsen Trade Promotion Landscape Analysis
Top 100 CPG Categories
% of Category Events that Don’t Break Even
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EXIT LIGHT, ENTER NIGHT,TAKE MY HAND
WE’RE OFF TO NEVER NEVER-LAND
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Net Price Realization
RGM vs Pricing vs Sales Prevention!
$1,605
$835
VolLY
-$547
Rate Mix L52
$138,079
$139,972
+$1,893M(+1.4%)
Volume Rate Mix
“sell more stuff” “charge more for it”“sell more of the expensive stuff”
marketing, innovation, consumer demand, category trend, shopper, channel growth,
price pack architecture
LPI / base, guardrails / promo depth and frequency, trade efficiency, price pack architecture
price pack architecture, mix management
Net Price Realization
*So
urc
e: IRI,
MU
LO L
52
W t
hru
7.1
4.1
9**
To
p 5
0 F
oo
d M
anu
fact
ure
rs
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Source: IRI, MULO+Conv, thru 1.1.17
23.5%
12OZ 12PK
3.1%
2015
17.9%
27.0%
26.8%
2.6%
$27.5B
3.3%
7.4% 4.9%
15.5%
3.2%
2013
17.6%
2.6%3.2%
3.6%5.5%
15.1%
2016
27.5%
20OZ
5.7%
24.9%
2014
13.8%
16.9%
2.7%
5.1%
14.4%
26.8%
2LTR
3.1%
16.0%
26.0%
25.6%
5.9%
$27.7B $28.0B
2.7%
ALL OTHER
12OZ 8PK
12OZ 24PK
1LTR
16.9OZ 6PK
$27.9B+0.4%
$845
$160
Vol
-$372
$21,966
LY Rate Mix L52
$21,333
+$633M(+3.0%)
*Source: IRI, MULO L52W thru 7.14.19
Who does it well? How do they do it?
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What is going on with this ad?
Volume
• 3 Manufacturers →
>97% of Households
• Must Buy 3 →
Incremental Units
Rate
• Less than 3 units →
$5.49 Each
• No Subsidized Base
• Not 4/$10, 3/$9, 3/$10
Mix
• 8-pk 12oz bottles
• 8-pk Sparkling Water
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✓Grew units, dollars, profit…✓Largest soda week in in retailer’s history!✓Dr Pepper Snapple awarded Category Adviser
of the Year
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DATA
•Consolidates POS, syndicated, internal financial and other data sources as well as model coefficients for advanced analytics
•BUSINESS INTELLIGENCE
•PRICING STRATEGY
MANAGEMENT
• Building customer promotion plans • Execution of pricing strategy• Trade execution of trade terms: funds, creating accruals, check book management, settlements, clearing customer deductions
• TRADE PROMOTION MANAGEMENT• CUSTOMER PLANNING / EXECUTION
EFFECTIVENESS
• Insights, data analysis to identify opportunities and areas for improvement• Generates roles, guidelines and goalposts for promotion planning• POST EVENT ANALYSIS
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OPTIMIZATION
• Using machine learning determine promotional plans and set promotional calendars• Provides decision automation; indicates the optimal given a series of constraints and past promotion performance
• PROGRAMMATIC TRADE SPENDING• INSIGHTS INTO ACTION OPTIMIZATION
• AI complements traditional analytics by helping people discover insights • Greater, and more diverse data sources• PRECISION, AT SCALE• AUGMENTED INTELLIGENCE
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LOVE ME FASTER THAN THE DEVIL
RUN ME STRAIGHT INTO THE GROUND
DROWNING DEEP INSIDE YOUR WATER
DROWNING DEEP INSIDE YOUR SOUND
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TACTIC
TIMINGseasonality
frequency
GEOGRAPHY
channel | customer | banner cluster | region | store
tpr |multiple | % offdepth of discount
MERCH
displayfeature
POS
ANALYTICS
elasticity | threshold |cross-price | cannibalization |
incrementality | post-event ROI
KPI
net sales | gross margin | shareretail dollars | retail margin |
units/store/week
CATEGORY
competition | private labelgrowth vs margin
CONSUMER
households | segmentstrips | items in basket
MY HEAD
HURTS
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Fewer sales people
More things to sell
At more places
MY HEAD
EXPLODES!!!
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A thought experiment…
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What if AI could…?
MY HEAD IS BACK IN ONE PIECE…
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AND ALLTHE ROADS WE HAVE TO WALK ARE WINDINGAND ALL THE LIGHTS THAT LEAD US THERE ARE BLINDING
COZ MAYBE, YOU’RE GONNA BE THE ONE THAT SAVES MEAND AFTER ALL, YOU’RE MY WONDERWALL
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where are we headed?
expansion contraction
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expansion
Source: McKinsey RGM 3.0
focus on the long-term
more / new data, advanced analytics
deeper insights, focused strategies
broader structure and roles
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26Smack dab in the middle!
Source: POI
contraction
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We are under pressure
Do not go off to never-never land
Let RGM come out if its cage, and you will do just fine
Destiny is calling us!
But beware of drowning deep inside the data
The journey we have to walk is winding
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COZ MAYBE, YOU’RE GONNA BE THE ONE THAT SAVES MEAND AFTER ALL, YOU’RE MY WONDERWALL